Exxon made $11.68 billion in the second quarter, says the AP, which is “the biggest profit from operations ever by any U.S. corporation,” but that wasn’t quite enough to please investors, who were disappointed.
…the results were well short of Wall Street expectations and its shares slumped 3 percent.
Apparently, earnings from competitor Royal Dutch Shell got everyone’s hopes up when their profits jumped 33%. Poor Exxon.
Oil Profits Shatter Records [Huffington Post]
(Photo: whatatravisty )
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If you think any given corporation is making too much money all you have to do is buy some of their stock and some of that money will be yours. You can then give it to the homeless or donate it to PETA or do whatever you want with it. But my guess is that you’ll keep it for yourself.
@matchsmalone: “The fact is, this has been one of the major news stories of the day, and Meg could have just as easily linked to just about any news organization in the country.”
The problem is that the editor didn’t link to a news organization or an original source, but instead chose to link to another blog – one with a reputation for sensationalism and bias. The fact that some people can’t see why that is a problem is baffling to me.
Makes me wish I had invested in Oil/Gas companies, Microsoft, Google, etc… When Oil prices were low, M$ was almost unknown, and Google, was about to go IPO.
I could’ve been retired by now, and siting on the beach on my private island in the Bahamas…..Damn…
Clap, clap, clap.
Bravo Exxon. Bravo, may your prosperity flow through your arm and up a member of Congress’s back.
I know we all just hate when companies post profits, so how about huge losses? General Motors just posted a $15.5 BILLION loss. Do we all feel better now?
@nycaviation: Exactly. It’s a very large profit as an absolute number, but not very impressive as a profit margin.
lol@stevejust. Really? So Exxon is systematically hiding it’s profits? It’s unclear to me why employees would engage in this sort of activity, when they all own stock in the company.
I mean sure, with that much money passing through their hands, I’m sure someone somewhere in the company is slipping something extra into thier own pockets. But you are suggesting that Exxon’s profits are substantially higher than what is reported, without giving any evidence or even a well thought out, plausible scenario. Tell me, where does one hide, oh, say, 10 billion dollars? And then tell me why you are certain Exxon has done it. I want to hear all the juicy conspiracy theory details!
If you think a company is making obscene profits you know which stock to buy…
@Bladefist: but Exxon didn’t stop making money…it just didn’t make 3% more than it did.
Capitalism at its best
By their own ads, Exxon’s profit margin went UP from like 9 cents a gallon to 11 cents a gallon between last year and this year.
Reading through these comments has been educational and more than a little entertaining.
@ Bladefist & his Argumentors:
Yall know allot more about business than I do I’ll give you that. What I do know is that it doesn’t matter who we have in the White House. I’ll vote as my gut tells me, and know that whether it’s McCain or Obama we’ll be lucky to see any change in the status quo. As a “middle class” citizen making 57K a year I’m not seeing much difference with either party. I just want to stop fighting wars for the “American way” and let’s focus on getting our own house in order before we start telling other nations how to run theirs, and go to war over it.
@stevejust: I don’t think anyone is necessarily saying that they need to make 35%, we’re just saying that the 8% they did make is not very big, and not worthy of all the vitriol.
The fact is, the profit margin is the more important number, not the absolute dollar amount. If Vegas offered to pay you 8 cents for every dollar you gambled, you’d tell them to F off. It’s not exactly the same, but when Exxon invests 140 billion dollars, there is a lot of risk in that. Especially with politicians constantly threatening to punish them for providing a product that we all need.
How much is too much? At what point does a company become evil? Remember that this company is made of PEOPLE, it has employees from every walk of life, and millions of stockholders. It’s not like all 11 billion goes directly into the pocket of three white guys who are sitting in their boardroom cackling right now. If history is any indication, it will mean dividends, which go to help hundreds of thousands of retirees and other people.
I’d also suggest you take another look at your tin-foil hat assumption that they are fudging their balance sheets. What you describe would be illegal, and yes there are people checking. There is something called the SEC that is tasked with regulating such things. Everytime the price of oil spikes, there is a Congressional investigation into whether or not the oil companies are “gouging” us, and they never find anything. Usually they finish by dragging oil execs in front of Congress so that they can yell at them to make themselves feel better.
I know that none of this matters to most of the commenters here, and for you it boils down to “oil bad, therefore companies making oil = bad,” but I think you should try to get past your knee-jerk emotional response and think about it logically.
@jwissick: Subsidized profits can not be questioned if the fall under the guise of capitalism?
@zundian: Um a deficit doesn’t just imply that the government doesn’t have enough money. It implies that they are spending too much. No matter how much tax revenue the government collects, they will spend it all. The last 80 years or so are certainly evidence of that. Tax revenue has gone up almost every year, and so has spending.
$11.68 billion would cover the costs for 1,168 wells that would be drilled at a cost of $10,000,000 each. There is no guarantee that all those wells will make money. And I am not exagerrating the cost there. And that’s in a proven field. And even in a proven field there is no guarantee that the well drilled will produce, leaving the oil company (or companies) involved in that well eating their costs. If the well does produce it could take decades for the company to see true profits from that well, not just initial costs being recouped. So, that they have made $11.68 billion in profits (on a profit margin definitely under 20%) is pretty impressive when you look at the rest of the budget.
Demand is up, costs of production are up (no new refineries in about 30 years in the US, although there is the possibility of one finally being built in the Dakotas), costs of exploration and drilling are up, and profits are up. Everything goes hand in hand. You have choices when it comes to this- Exxon is a pubically traded company- go and buy stock if you want a piece of the pie. Or start your own oil company, or drill your own well. Or reduce your consumption. That might be harder for anyone to do since it would involve not only gasoline (which seems to be the central focus of most), but plastics, household goods, cosmetics, etc. Oil produces more than just gasoline, you know.
@zundian:
Uh no… they will never turn a profit because THEY SPEND IT ALL.
All of them, both sides of the aisle, spend all of it and then some. If Exxon did that they would be bankrupt.
@jwissick: Actually, some kind of profits ARE evil, using the classical definition of the term. Usury was forbiddien by the Christian church from about 300 to about 1500, and is still forbidden under Islamic law. So there is some precedent for the idea that making a profit can be a morally evil act.
The guiding moral principle is largely about abuse of the power of the rich over the poor… increasing their own wealth by driving others to the point of insolvency or starvation.
Not that we’re talking about moneylending here. The moral principle probably doesn’t even apply. It’s not like people NEED gasoline in order to put food on their table, right? Plus of course, nobody believes in usury anymore. Thank goodness God changed his mind about what’s considered evil in response to the rise of the banking industry.
The thing that chafes me the most about this is that Exxon REFUSED to pay most of its punitive damages to victims of the Exxon-Valdez oil spill. (“Victims” being Alaskans whose livelihoods were destroyed by the spill — 32,677 of them.) Two court rulings (including the Supreme Court) slashed punitive damages from $5 billion (in 1994) to $507.5 million — that’s only $15,530.80 per person. With such record-breaking profits happening nowadays, such an inconsequential punitive settlement is unlikely to be a deterrent.
@jimdoria: “The guiding moral principle is largely about abuse of the power of the rich over the poor… increasing their own wealth by driving others to the point of insolvency or starvation.”
That may have been true during the Dark Ages when guilds restricted entry into the marketplace, but these days we have much more freedom. We have the freedom to take our business to a competitor if we choose, and we have the freedom to start our own business to compete if there is a need for one.
@matchsmalone: @matchsmalone:
I’m not saying Exxon “hides” profits. What I’m saying, primarily, is that the 10Q doesn’t reflect their actual profit MARGIN the way everyone on this post has indicated. They do a lot of transactions between subsidaries that are all owned by them for tax purposes. If ExxonMobil Chemical is paying ExxonMobil Refining, or vice versa, that’s a plus in one their books and a minus in the other’s books. The assumption being made is at the end of the day, all the pluses will add up to what “ExxonMobil” reoprts in their 10Q. What I’m saying is for reasons I can’t go into on a message board that it’s not a zero sum game. There’s all kinds of tax and accounting and devaluation and carry-over accounting techniques that obfuscate their actual P/E earnings ratio.
Citigroup has a lot of subsidiaries as well, CitiFinancial, CitiBank, etc.,. I don’t think other industries have subsidaries that charge eachother for services in the same way that the oil industry does, at least not to the same extent.
I could write a book about it, but I can’t explain it in a comment thread. Do your own investigating.
@shadowkahn:
This surely can’t be your rational argument. Puddleglum broke it down fairly well, and don’t misread my comment here as a congratulatory pat for oil companies, but the 8-10% profit margin these companies are making are very, very modest.
I liked the question, what number would be acceptable, as a quarterly/yearly profit, that wouldn’t have people up in arms? If Shell/Chevron/etc. made only 1 million dollars, but it was 50% pure profit, wouldn’t we as consumers have a much bigger problem with that?
This news is extremely shocking considering who is in office and the public officials in charge for most of the past 8 years.
Shocking.
One of my cars runs on free, used veggie oil from restaurants. It’s not just for hippies anymore.
“I don’t think Americans are concerned if we’re there (Iraq) for 100 years, or a 1,000 years, or 10,000 years” – John McCain
@Puck: Are you referring to the Democratic majorities in the House and Senate for the last two years? Oh wait, I forgot, George Bush isn’t President, he’s an omnipotent emperor who is responsible for every event that you disagree with.
@dondiego87: You’re only mentioning the punitive damages. Exxon also paid compensatory damages to compensate for the damage it caused. Exxon had already paid 3.4 billion in response to the accident.
The court ruled that they would have to pay for what they had done, and that was fair. They should have to make up for the damage they caused. The problem is that whenever an excessive amount is awarded in punitive damages, it encourages too many frivolous lawsuits. David Souter, one of the more liberal justices, even wrote the opinion in that case, saying that punitive damages should not be any larger than the compensatory damages they had to pay. Meaning it is excessive to make them pay more as punishment than the damage they had caused.
@matchsmalone:
How does a current democratic majority figure into a comment that said, and I quote, “This news is extremely shocking considering who is in office and the public officials in charge for most of the past 8 years.“
Are you Bladefist posting under a different handle? Last time I checked there was a republican majority in the house and senate for 6 of the last 8 years.
@matchsmalone:
This is such an ignorant comment that i’m not sure where to begin.
Clearly you have a strong understanding of government when you think that all the severe harm and damage that’s been caused to the country and world over this administration can be undone by a year and a half (the Democrats didn’t even get elected to the majorities in House and Senate until November 2006 and took office months after that, but hey, why bother with facts, right?) of Democratic rule in one branch of government (the legislative branch, for those paying attention). Someone should also explain to you how vetoes work and how many votes it takes to overcome said veto, but you know what, i’ve spent far too much time with you (30 seconds) already.
@stevejust: Fair enough. I didn’t see the “most” when I first read it.
@Puck: As we speak, Nancy Pelosi and the Democrats have adjourned the House and refused to pass any legislation addressing the current energy situation. Many Republicans (and even a few Dems) have stayed in the House to debate the issue, but Pelosi and co. would rather head home for their long vacation. Energy is the number one issue in the country, and they feel they would rather not be bothered to do their job right now. So I guess you’re right, at this rate, it will take decades to accomplish anything useful.
I would be curious to hear what specific policies enacted between 2000-2006 you disagree with, and why they are relevant to Exxon’s profits. Your earlier comment was kind of a general statement. Were you saying that you’re shocked that the profits are so low? After all, they were lower than expected and the stock took a hit. Or are you shocked because you think it’s profits are too high? What profit margin is considered too high for this industry?
Look forward to your response.
@opedog:
We’ll go by last years population for now.
July 2007 U.S. population = 301,139,947
That’s million, not trillions.
That would only be 302 million dollars if we round it up.
Not umpteen trillion,as you came up with. It’s very simple math.
20 billion – 302 million = 19,698,000,000
A little over 19 and a half billion dollars is still a lot of cash.
Cheers! I’m going to go cash in my stock now, and donate part of it to the poor!!
@Raiders757:
Let me help you out here this. Each and every citizen, as you say is 301,139,947. So … 301,139,947 x $1,000,000 = more than 30 trillion dollars. So no, Exxon could not give each and every citizen one million dollars without denting their wallet.
Ooops, i did put my decimals in the wrong spot.
Oh well, i’m sure my point was made. People go hungry, yet large companies rake it in like this. Also our government spends over 20 billion dollars a uear on the drug war, yet we still have children going hungry.
@matchsmalone:
Thanks for offering help, but I noticed the error of my ways after I posted.
Still, it’s nice that someone, such as yourself, point it out in a nice way. Unlike the pricks on the first page.
Cheers!
@Raiders757: No problem, it’s an easy mistake to make.
@TakingItSeriously: Yeah, but you know a candidate who would actually be interested in rooting out the bad seeds and ineffectual hacks here would be dismissed as “unelectable”. -_-
@swimmermike: Ahunno, I find it hard to have much sympathy for oil companies and their boosters when they keep demanding more fronts that are increasingly difficult to get up and running (offshore, oil shale, ANWR, etc.) instead of exploring the land they already lease.
@matchsmalone: Kind of difficult for the Democrats to get anything into law that Bush won’t sign. Only the least meaningful (or most undeniably common sense) laws could get enough support to override a veto. I know, the system’s meant to keep partisan policies from going down the Congressional Slip-n-Slide (a wholly-owned subsidiary of Wham-O!), but that’s not really how it’s working nowadays. Besides, the way the Democrats caved in on retroactive immunity was just shameful.
How many of you read that Exxon’s 1st half 2008 income taxes paid were $20 Billion?
Or their capital and exploration spending in the first half of 2008 cost $12.5 Billion?
Profit in the first half of 2008 was $22.5 Billion.
And Exxon’s tax rate thus far this year is 47%.
Last, Exxon alone will pay more income taxes than the bottom 50% of taxpayers combined.
“What gets reported by the media is Exxon’s second-quarter record profits of $11.68 billion for a U.S.-based company, without distinction between profits earned in the U.S. and profits earned outside the U.S.”
“Exxon is a global company and operates in the United States, Canada, Europe, Africa, Asia-Pacific, the Middle East, Russia/Caspian region, and South America. In 2005, Exxon earned about 70% of its profit outside the U.S. and paid 70% of its income taxes outside the U.S., and in 2006 Exxon earned 71.4% of its profits outside the U.S. and paid 81% of its taxes outside the U.S. Source: Exxon’s annual reports.”
source – [mjperry.blogspot.com]